A company uses the indirect method to prepare the statement of cash flows. How will a gain from the sale of equipment be presented on the statement?

Question

Quizplus · Accepted Answer

The gain from the sale of equipment will be deducted from net income in the operating activities section using the indirect method. This is because the gain is a non-operating item and therefore needs to be adjusted from net income to compute cash flows from operating activities.

A Company Uses the Indirect Method to Prepare the Statement